If a shipment clears customs without a cedi of VAT charged on it, is the domestic sale of that shipment automatically VAT-free too? A lot of importers — and a lot of CITG students — assume yes. GRA’s Practice Note DT/2021/004, issued 30 September 2021 by Commissioner-General Ammishaddai Owusu-Amoah under Section 100 of the Revenue Administration Act, 2016 (Act 915), exists specifically to correct that assumption. This article gives you the exact two-step test GRA expects you to run on any imported good, and the one real example that trips up more taxpayers than any other.
The Legal Basis
Four sections of the VAT Act, 2013 (Act 870) — Sections 1, 33, 35 and 37 — read together with the Customs Act, 2015 (Act 891), set out three possible outcomes for an imported good: exempt both at import and domestically; exempt at import but taxable domestically; or taxable both ways. There is no fourth outcome. A good cannot be taxable at import and then become exempt once it’s inside the country — exemption only ever narrows as a good moves from the border to the domestic market, never widens.
Why Two Different Tests Matter
Exempt import status depends on a combination of the international Harmonised System customs code and the First Schedule to Act 870. Exempt domestic supply status depends on the First Schedule alone. A good can satisfy the Harmonised System exemption at the border without ever being listed in the First Schedule — and when that happens, the import is VAT-free, but the domestic sale is not.
GRA’s Own Worked Examples
Exempt both ways: Obiba JK imports fishing boats. Heading 3C 2.4 of Part C(II) of the Third Schedule to Act 891 exempts the boat at import; item 7(a) of the First Schedule to Act 870 exempts the domestic supply. Both tests pass — fully exempt.
Exempt at import, taxable at home — the trap: Nkokomba Enterprise imports generator sets (375 KVA and above) exempt from VAT at the border. Woarabeba Ventures, a plastics manufacturer, buys the generators and refuses to pay VAT, citing item 16 of the First Schedule (machinery specifically designed for manufacturing). GRA’s ruling: generator sets are not specified in the First Schedule as manufacturing machinery, so Nkokomba must charge and account for VAT on the domestic sale. The exemption that applied at the border does not survive the sale.
Taxable both ways: Ponkijoe imports telephone handsets — not exempt under the Harmonised System or the First Schedule, so VAT applies at import and on the domestic sale. Kokorokoo Poultry Services imports day-old chicks from Togo — live animals are not exempt under either test, so VAT applies at import and again when sold to Ghanaian farmers.
Exam Tip: Never answer an import-VAT question with a single verdict. Run the Harmonised System check for the import leg and the First Schedule check for the domestic leg separately, then state both conclusions before giving your final answer. Examiners reward candidates who visibly check both.
Conclusion
“Exempt at import” is a customs-law answer. “Exempt domestically” is a VAT-law answer. They are decided by different tests, and Practice Note DT/2021/004 exists precisely because taxpayers — real ones, not just students — keep assuming they’re the same question. Two checks, every time, and you’ll never fall into the Woarabeba Ventures trap.
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